Tuesday, October 16, 2007

Sword of Damocles or Damn Sword?


Whether it’s consuming the latest developments in the lives of personalities we adore or abhor, like Pamela Anderson, Lindsay Lohan, and Brittney Spears, or blogging about the conservative hordes going after the GSEs, certain behavior drives some of us to compulsive responses.

Now, anyone infatuated with the above personalities or topics will claim they have “no problems” and their interest is “normal.” But, the truth is that we watch each new incident and development and file it in a compartment which, generally, supports our predisposition and then we cite the new event as proof that we have been right all along.

But, in defense of we the obsessed, the “perps” make it so easy for us to become entranced, repeating the same bizarre acts over again, confirming the reason we are interested in the first place!

Think of Pamela Anderson’s marriage partners and her links to porn tapes or performers in same There's Lindsay Lohan, who already has “dried out” more times than a rented Ocean City beach umbrella, and who called her recent session “sobering.” Brittney Spears has had multiple and very vivid setbacks this year and that was before she shaved her head and the court took away parental control of her two sons!

I’m no different than the average Lindsay, Brittney or Pamela Anderson fan, save I prefer to spend my time cataloging what I think are outrageous, odd, punitive and ideological offenses that GOP interests and Administrations, most notably the current one, have carried out against the GSEs, since the early Reagan days.

Now here is where I have to offer my standard caveat. Yes, there have been any number of GOP Senators and Congressman who have not aided that effort, but they have been in the numerical minority and have found it tough to overcome the instincts and actions of their political cohort. I salute these “menschs” (I know that most aren’t Jewish, but the word fits) whenever I can, because--when they stand up inside the GOP--they are outnumbered and face a harsh ideological blowback.

The Democrats

Therefore it always has fallen to the Democrats--and will again--to preserve the key elements of the mortgage finance system and stop the Bush White House, now, from manipulating their regulatory primacy to scuttle Fannie Mae and Freddie Mac, two players in the mortgage finance system which most agreed have worked fabulously, as the subprime market and the “jumbo” mortgage markets suffered various degrees of failure and still are impaired.

Based on last week’s media reports, the D's are going to have to get to work, again. The two companies have come into the Bush cross hairs and the conservatives are considering regulatory plans to rock the structure of the GSEs, drain them of more working capital, citing “safety and soundness concerns,” and give Treasury control to govern (read "limit") the GSEs debt raising.

I guess while they “negotiate with the Hill” on one hand, the Bush Administration wants to construct a “sword of Damocles”--to hang over GSE heads--with the other.

It will come a no surprise to most who read my blog that I believe on every major policy issue, including Afghanistan, the Iraq War, Korea, Katrina, global warming, tax cuts, Valerie Plame and Joe Wilson, children’s health insurance, vehicular mileage standards, immigration, Guantanamo prisoners, domestic wiretapping, the firing of the US Attorneys, and many more, the Bush Administration has misled the American people consistently and distorted the positions of their opponents.

They Do Lie and A Lot

The Administration fabricates even to its own guys, withholds documents and facts, creates fanciful precedents (“the Vice President is part of no unit of government”), threatens whistle blowers, and tries to intimidate and otherwise bully those who disagree with them, all this while the “Leader of the Free World”—if one of his former aides can be believed—used his valuable time with Vladimir Putin arguing about chicken parts.

With this sorry history in mind, why does anyone think that this White House, Treasury, or OFHEO will be any more honest when it comes to GSE matters?

If the news reports are accurate, those in Congress laboring on GSE legislation should be major league PO’d—like gut wrenching, “I want to blast your nose into oblivion” mad--if Treasury tries to scuttle Fannie and Freddie debt raising activities and OFHEO suddenly decides that the GSEs still don’t have enough capital.

That’s “bad faith,” but I guess the Congress is used to seeing that. Plus, those regs—if put in final form--will hurt more than Fannie and Freddie.

Note to the world: OFHEO and its puppet masters never will believe that Fannie and Freddie have enough capital or enough constraints, certainly not in God’s lifetime!

As long as OFHEO is the GSE regulator, you will have guerilla warfare carried out by the regulator--with plenty of support from its political soul mates—because this OFHEO head thinks the GSEs should exist as only a shell of themselves, if at all.

The House has spent more time than the Senate trying to cooperate with the White House on GSE legislation. Yet Barney Frank’s hard work basically would get kicked to the curb as Paulson and Lockhart (or whomever in the White House is pulling the strings) tries to steamroll, via these proposed regulations, the legislation on which the House spent great time trying to construct a rational GSE regulatory paradigm.

The Senate--maybe realizing that the crew downtown speaks with more forks in their tongue than a two sets of table wear--has not drafted its “Chairman’s mark” dealing with GSE regularity restructuring and may never do so, given the new White House perfidy.

The Bush Administration could be engaging in well known tactics, saying one thing to the Hill about the GSEs regulatory future, while simultaneously considering new regulations to strangle Fannie Mae and Freddie Mac.

I am not sure what the solution is, but I believe that the congressional leadership, Senators Dodd and Schumer and Rep. Barney Frank and their colleagues—on both sides of the aisle--are up to the task and won’t be cowered or conned by the Administration’s brazenness.

If not Reason, Maybe a Stake in their Heart Will Do It?

Language in appropriations bills banning use of any appropriated agency dollars to implements regs of this sort may be one consideration the Congress should examine in dealing with those with those who insist playing only by their rules, rules which have left a lot of domestic and international ruin and unhappiness in their wake.

Lockie and his friends don’t like being challenged or criticized and--with this latest “in your face, Congress” maneuver--seem open in their disdain for the legislative process.

After years of meeting/exceeding their capital requirements and also achieving a multitude of affordable housing goals--representing 55% of their annual business volumes--Two Gun still can’t find anything good to say about the GSEs.

Yet, after trumping their “systemic risk,” in an exercise two years ago which allowed him to raise Fannie’s and Freddie’s required capital by 30%, Lockie may now decide that the companies still are short another $10 billion in capital or so, just when Treasury decides that Fannie and Freddie need to jump through hoops and get Treasury’s permission to go into the debt market for working capital.

The reported regs--if successfully implemented--will achieve some primary objectives in the Bush agenda, load the GSEs up with unnecessary costs and make them slog through regulatory delay. That will make Fannie’s and Freddie’s business operations more expensive, not to mention the cost of the homes they help finance, and slow down their operations and injure their competitiveness.

So the President’s men decide the best way to treat Fannie Mae and Freddie Mac, which didn’t abandon the mortgage markets, didn’t ignore their missions, and didn’t walk away from mortgage commitments--as so many others did over the past 6 months--is to assault them through the regulatory process. KnowwhatImean?

And just who do our erstwhile public servants seek to advantage, when they get done working over Fannie Mae and Freddie Mac? “Class, class, Buller, Buller…..?” Why, it’s the spoilers, the gang of mega-commercial banks and Wall Street firms who bragged for years that they were the equal to the GSEs and argued they were primed to replace old dumpy consumer friendly, fixed-rate-mortgage-facilitating Fannie and Freddie, if only given a chance.

Well they got their “big chance,” when the mortgage market gagged on the subprime seeds these same guys had planted. The Fannie/Freddie wannabes’ resolve got tested and the GSE pretenders responded by going limp, feigning injury and hauling butt to the safety of the side lines, where some still hide.

Those looming subprime financial losses can’t be dodged for long, but most of this White House crew will be well into their next careers when this red ink finally hits the investment houses, the big commercial banks, and possibly the American people.

Anticipating this, a bipartisan majority in Congress can’t allow the Administration’s anti-GSE ideologues to plunder Fannie Mae and Freddie Mac, leaving the nation’s homebuyers without these major homeownership resources, when the butcher’s bill comes due.

Maloni 10-16-2007

1 comment:

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